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Calcutta High Court (Appellete Side)

4177/2006 on 2 March, 2011

Author: Dipankar Datta

Bench: Dipankar Datta

   44
2.3.2011

C.O.4177 of 2006 Mr. Suchit Kumar Banerjee ...for the Petitioner This application under Article 227 of the Constitution of India is directed against judgment and order dated 31.8.2006, passed by the learned Additional District Judge, 1st Court at Alipore, 24 Parganas (South). By the impugned judgment and order, Misc. Appeal No.328 of 2005 was allowed and thereby the order under appeal, dated 20.7.2005 passed by the learned Civil Judge (Senior Division), 10th Court at Alipore in connection with Title Suit No.24 of 1980 allowing an application dated 21.8.2002 filed by the plaintiff under Order XL Rule 1 of the Code of Civil Procedure (hereafter referred to as CPC) read with Section 151 thereof, was set aside. Certain facts need to be noted.

Madan Mohan Modak (since deceased) and Kartick Chandra Modak (since deceased) were carrying on a business of manufacturing and selling sweetmeats in partnership at premises No.220 Acharya Prafulla Chandra Road, Kolkata 700004. Kartick Chandra Modak filed Title Suit No.24 of 1980 on 28.2.1980 before the Sub-Judge, 10th Court at Alipore praying for, inter alia, declaration that the partnership between him and Madan Mohan Modak stood dissolved with effect from December, 1979; alternatively, a decree for dissolution of partnership was prayed. Direction was also sought on the defendant to render accounts of the partnership business and assets and to pay to the plaintiff such 2 amount that may be determined upon taking into consideration such accounts, discovery by the defendant and enquiry into assets of partnership business, Receiver and other relief. During the pendency of the suit, Kartick Chandra Modak died. Bimala Modak and Kalpana Modak, the opposite parties 7 and 8 herein respectively, were substituted in his place. At the same time, on the death of Madan Mohan Modak, the petitioner herein viz. Kedarnath Modak, and Kashi Nath Modak, Kamala Bala Nag Arati Modak and Bharati Das being the opposite parties 3, 4, 5 and 6 herein respectively, were substituted in his place. Subsequently, Kashi Nath Modak died and in his place his widow Sulekha Modak and Niranjan Modak were substituted, who are the opposite parties 1 and 2 herein. Later, Kedar Nath Modak being defendant no.10 in the suit, the present petitioner, was transposed in the suit as plaintiff no.2.

On 30.3.1985, the suit was decreed in preliminary form on contest against the defendant. It was ordered as follows:

"That the suit be and the same is decreed in the preliminary form on contest against the Defdt. The partnership business between the plff and the defdt do hereby stand dissolved and the plff do also get a decree for taking of the account of the partnership business. The plff will be entitled to have the account taken with the help of a Pleader Commissioner appointed initially at his cost on his depositing Rs. 100/- as cost of the accounts. Commissioner to be appointed within a month from this day. The cost of the accounts Commissioner will be ultimately divided equally between the parties to be borne by them equally. The Commissioner thus appointed will confine himself to the sweetmeat shop of the parties at 220 Acharya Prafulla Chandra Road, Calcutta and will not take account of any other business. The Defdt. will be liable to render account only for the assets of the partnership business of the sweetmeat shop. Parties will bear their own cost upto this stage."

Title Appeal No.478 of 1985 was filed by the defendants challenging the preliminary decree. The appeal was dismissed on contest by an order dated 20.7.1987.

A second appeal was preferred which was also dismissed by this Hon'ble Court by order dated 8.4.1999. Dissolution of the firm, therefore, attained finality.

In terms of the preliminary decree, an advocate commissioner had been appointed on 26.9.1989. The advocate commissioner had been to the locale for the purpose of preparation of accounts. However, it appears from his report that was filed before the trial court on 3.8.1989 that the advocate commissioner could not inspect the books and documents for the purpose of preparation of accounts because of non-cooperation of the defendants who insisted that the commission work ought to be held at the Bar Library, Alipore Judges' Court instead of at the locale.

It was at that stage that the petitioners filed the application under Order XL Rule 1 read with Section 151 of the Code on 21.8.2002.

The trial court, it appears, after hearing the parties finally, by a lengthy reasoned order, appointed one Pradip Kumar Dutta, advocate, as Receiver in respect of the sweetmeat business of the firm. He was directed to take possession of the suit property and to maintain the same out of the income from sale proceeds of the sweetmeat shop as well as to defray necessary expenses for manufacturing of sweetmeats. He was further directed to run the business and to distribute amongst the partners the profits after payment of liabilities. The Receiver was also directed to submit 4 accounts once in every month accompanied by necessary receipts and vouchers, the first of which was to be submitted by 31.8.2005. The Receiver was entitled in terms of the order to remuneration of Rs.1000/- payable out of the sale proceeds of the partnership firm. One of the reasons that weighed in the mind of the trial court in appointing the Receiver was the inability of the advocate commissioner to prepare accounts because of alleged non- cooperation of the defendant, as available from the report. The trial court was of the further view that appointment of Receiver was necessary for the purpose of preservation of the property and that if the Receiver takes charge, that would not deprive the defendants in any manner.

Sulekha Modak and Niranjan Mondal, feeling aggrieved by the order dated 20.7.2005, carried the same in appeal whereupon the same was allowed by the impugned judgment and order. The appellate court was of the view that the advocate commissioner having been appointed by the preliminary decree which had not been challenged by any of the parties, the order of the trial court appointing Receiver suffers from an infirmity for which interference in appeal was warranted.

Mr. Banerjee, learned advocate representing the petitioners, has placed in detail the facts of the case and assailed the order impugned by referring to various authorities, viz.

(1) Kerr on the Law and Practice as to Receivers by Raymond Walton;

(2) Tagore Law Lectures,1897 regarding Law relating to Receivers by Sir John Woodroffe;

(3) The law of Partnership in India by Sunderlal Trikamlal Desai;

(4) Pollock & Mulla on The Sale of Goods Act and the Partnership Act by Denis Nowell Pritt He contended that once the partnership business is dissolved, the Court ought to appoint a Receiver as a matter of course. He further contended that although the Court while considering an application for appointment of Receiver is placed in a position of great difficulty, it is under the necessity of adopting some mode of proceedings to protect the interest of both parties according to the best view it can take of the matter. He further proceeded to cite the decisions reported in AIR 1972 Patna 75 and AIR 1976 Patna 366 to contend that in similar situation, the High Court had appointed Receiver over the suit properties.

Regarding jurisdiction of the High Court under Article 227 of the Constitution, he relied on a decision reported in (2005) 7 SCC 211 where despite concurrent findings of fact by the lower courts, the Supreme Court had upheld the order of the High Court interfering with an order of the trial court because a serious error of law had been committed resulting in failure to exercise jurisdiction vested by law.

According to him the trial court after proper application of mind had exercised discretion in appointing the Receiver and the same ought not to have been disturbed by the appellate court. He, accordingly, prayed for setting aside of the impugned order passed by the appellate court and for restoration of the order passed by the trial court.

From the affidavits of service filed in Court it appears that the appellants before the appellate court being opposite parties 1 and 2 have been duly served with copies of this application on 10.8.2009. There is no appearance on their behalf. The other opposite parties have also been duly served, yet, there is no appearance on their behalf too.

The question that arises for consideration is whether the appellate court was justified in interfering with the order passed by trial court appointing the Receiver. As has been noticed above, the appellate court upset the order of the trial court on the ground that appointment of advocate commissioner by the preliminary decree remained unchallenged and unrebutted and that there was no necessity to appoint a Receiver ignoring the advocate commissioner. The aforesaid narrative of facts would reveal that the advocate commissioner did not succeed in his pursuit to prepare the accounts because of non-cooperation of the defendants and he had sought for directions from the trial court, vide report dated 3.8.1999. It was at that stage that the application for appointment of Receiver was made and such prayer was granted three years thereafter. The appellate court failed to appreciate that the parties did intend to work out the decree after the same was upheld in the two appeals filed thereagainst and it was only when it was found that the advocate commissioner was facing difficulty in complying with the directions passed by the trial court because of non- cooperation of the defendants that the petitioners approached the trial court for appointment of Receiver. The situation when the advocate commissioner was appointed and the circumstances when 7 the trial court appointed the Receiver were not quite the same. The petitioners had alleged that because of the failure on the part of the advocate commissioner to prepare the accounts, the defendants have been benefiting from the usufruct of the partnership business and for the preservation of the suit property, appointment of a Receiver ought to be made. The changed circumstances that prompted the trial court to appoint the Receiver, it appears, was not considered in the proper perspective by the appellate court, which proceeded to set aside the order appointing the Receiver on an erroneous basis.

On the given facts and circumstances, the discretion exercised by the trial court was also not too unreasonable and clearly wrong. In exercise of appellate powers, a court interferes where the order under appeal is clearly wrong and not when it is not right (see: AIR 1980 SC 1896).

In my considered view, the appellate court also failed to consider the provisions contained in Sections 46 to 48 of the Partnership Act, 1932. Unless the Receiver was appointed, the provisions contained therein cannot be worked out to the benefit of the parties.

In the result, I find no option but to interfere with the order of the appellate court. The order dated 31.8.2006 stands set aside. Misc. Appeal No.328 of 2005 stands dismissed.

The order of the trial court is restored. It shall now be the duty of the trial court to direct the Receiver who had been earlier appointed to act in terms of the order dated 20.7.2005, or to appoint a new Receiver on fresh/earlier terms and conditions. However, in 8 any event, the Receiver earlier appointed or the Receiver to be appointed afresh shall be entitled to reasonable remuneration quantum of which may be fixed by the trial court as it deems fit.

This application stands allowed, without order for costs. The learned Judge in the trial court is requested to act in terms of the order with utmost expedition.

Urgent certified photostat copy of this order if applied for, be supplied to the parties expeditiously.

(DIPANKAR DATTA,J.) bm